The "LoadLibrary failed with error 193: %1 is not a valid Win32" means that a 64 bit operating system is trying to load a 32 bit Win32 file.
You can check the bitness of the DLL file using dumpbin. You can do so at the Windows Command Prompt:
C:\> call "C:\Program Files (x86)\Microsoft Visual Studio 10.0\VC\vcvarsall.bat"
C:\> dumpbin \headers DLL_filename
Fixing the error involves one of the two following options:
1. Run the application under 32 bit MATLAB.
2. Compile the .dll as a 64 bit application.
a. In Visual C project properties, change the Platform to x64.
b. In Visual C project linker library path properties, add "C:\Program Files\Microsoft SDKs\Window\V7.1\Lib\x64 so kernel32.lib is found."